Retirement can be one of life’s most joyful and exciting prospects – and for some teachers it can’t come soon enough.
For others though, teaching is a lifetime of work that can be hard to leave behind. The very idea of leaving the classroom for the final time takes quite some getting used to.
That’s why it’s so important to understand the options available to you via the Teachers’ Pension Scheme, like ‘phased retirement’.
Phased retirement offers a more gradual end to your teaching career, letting you wind down towards a life of leisure at your own pace. Recent research commissioned by Wesleyan Financial Services, providers of specialist financial advice for teachers, unsurprisingly shows it is an appealing concept for many.
But the research also reveals that a number of education professionals – particularly headteachers and other senior leaders – simply don’t feel that phased retirement is possible for them.
Here we’ll look at those findings, and how with the right plan in place, you might be able to make phased retirement work for you.
What headteachers are saying
In the survey of more than 500 headteachers and school leaders aged 50+, more than half (53%) said they would consider taking phased retirement.
Many like the idea of being able to continue working while avoiding burnout (39%), phase into retirement while retaining a sense of purpose and routine (29%) and support more effective succession planning at school (21%).
However, 16% of senior teachers and education leaders don’t believe a phased retirement would be achievable for them. Some indicated that current school budgets don’t allow for school leaders to use phased retirement options (15%), and that there is a culture in the profession that frowns upon phased retirement being taken (14%).
But most suggested it was the lack of clarity around phased retirement that provided the main obstruction.
When asked why they thought most teachers chose to retire fully, more than a third (37%) of headteachers and senior educators said phased retirement options were ‘unclear and not talked about’.
Making your retirement options clear
Darren Mills, Specialist Financial Adviser at Wesleyan Financial Services, agrees that phased retirement can be complicated – but it shouldn’t stop you from retiring the way you want.
“While it is a powerful option in the Teachers’ Pension Scheme, the rules of phased retirement can be complex. The main one to remember is you must reduce your work week by 20% at a minimum, and avoid falling into the trap of doing extra work on your non-working day, which is easier said than done.
“Our top tips for teachers considering phased retirement are to understand if it’s affordable and how it impacts your remaining pension.
“It’s also critical to understand how to apply for phased retirement, the length of the process and what the tax implications could be – which is why speaking to a Specialist Financial Adviser is always sensible.”
Understanding your finances
You can start to take phased retirement from the age of 55, so if you’re considering that option, it’s crucial to put a financial plan in place as soon as possible.
At the heart of that plan will be affordability – an understanding of how much you might need for the post-work lifestyle you want and where that money will come from.
According to the Retirement Living Standards, an individual would need £31,300 per year for a moderate retirement, and more than £43,000 per year for a luxurious one. But in reality, it depends entirely on your circumstances and the kind of retirement you desire.
For a phased retirement, where your salary will reduce initially before it stops, affordability can be a complicated picture, but that’s where financial advice comes in.
Depending on your needs, advisers may be able to support with visual projections and cashflow modelling, to help turn ‘complex’ into ‘clarity’.
The Importance of specialist advice
It’s important to remember that retirement planning isn’t one size fits all – it’s entirely unique to you. That’s why it’s important to have access to financial specialists who understand the ins-and-outs of your career and your pension scheme, to help you build a plan that works for you.
At Wesleyan Financial Services, our Specialist Financial Advisers are there to back you all the way – with specialist knowledge to show and explain your retirement options at every stage. That’s why we’re an approved financial advice partner of the teachers’ union, NASUWT, as well as the National Association of Head Teachers (NAHT).
Whether you favour phased retirement or have an eye on leaving working life early, find out more and book a full financial review at wesleyan.co.uk/teachers-retirement.
Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.
